The estimated cost is 144 billion rupees, and Nepal will receive 21.9 percent, or 197 megawatts, of free electricity from the project.
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The physical progress towards production of the 900 MW Arun-3 Hydropower Project has reached 74.61 percent.
According to the Investment Board, the financial progress is 74.6 percent. SJVN Arun-3 Power Development Company (SAPDC), a subsidiary of the Indian government company Sutlej Hydropower Development Corporation (SJVN), is constructing the Arun-3 Hydropower Project in Sankhuwasabha.
The total estimated cost of the project is Rs 144 billion. The company is also constructing a 253-kilometer long cross-border transmission line with a capacity of 400 kV from the project power plant to Sitamarhi in India. The Investment Board has stated that the physical progress towards the transmission line is 58.3 percent and the financial progress is 58 percent. The target for the completion of the hydropower project, which began construction in 2075, was set at five years. The construction of Arun-3 should have been completed by March 2025. However, after the work was not completed, the company has applied to the Investment Board to extend the project's commercial production date (COD) by 18 months.
The 63rd meeting of the Investment Board held on 13 Jestha had decided to recommend to the government to form a Project Review Panel (PRP) to extend the COD time. After that, the 63rd meeting of the Board decided to recommend to the government to form a PRP as per the Project Development Agreement (PDA) of Arun-3.
The Cabinet meeting held on 18 July had decided to give the authority to form the PRP to the Chief Executive Officer of the Board. ‘In accordance with the Project Development Agreement between the Developer Company and the Government of Nepal (Board of Investment) for the development of the Arun-3 Hydropower Project, the Chief Executive Officer of the Investment Board will be given the authority to form a Project Review Panel-PRP consisting of Dr. Pawan Kumar Shrestha, Dr. Pawan Kumar Bhattarai and Dr. Ganesh Prasad Neupane as subject experts, approve the PRP Agreement and sign the PRP Agreement on behalf of the Government of Nepal,’ the Cabinet has stated.
The board will decide whether to extend the COD period only based on the report submitted by the PRP formed by the Council of Ministers. The board office has stated that the PRP will study and review the reasons given by the Arun-3 Hydropower Project for the extension of the deadline and prepare a report. The PRP formed by the board has not yet submitted its report. The board has stated that it has applied to extend the COD period until September 2026, citing problems such as transmission lines and land acquisition.
The board's Chief Executive Officer (CEO) Sushil Gyawali said that most of the problems related to Arun-3 have been resolved. 'There were 14 pages of problems related to land acquisition and access roads for Arun-3, but now many problems have been resolved and have been reduced to one page, which is also being resolved gradually,' he said, 'The work related to the project and transmission has progressed smoothly.'
In 2008, the Sutlej Hydropower Corporation, owned by the Government of India, acquired its license on a competitive basis. The Project Development Agreement (PDA) was signed in 2014. The then Prime Minister KP Sharma Oli and Indian Prime Minister Narendra Modi jointly laid the foundation stone of the project in Kathmandu in 2018.
According to the PDA, Nepal will get 21.9 percent, or 197 megawatts, of free electricity from the project. The project will have to pay 7 percent energy royalty to the Government of Nepal for 15 years after the start of production and 12 percent for the next 10 years. The royalty will be Rs 400 per megawatt for 15 years after the start of production and Rs 1,800 per megawatt for the next 10 years. The PDA states that the project will be handed over to the Government of Nepal after 25 years of construction. The annual energy production from the project will be 4.18 billion units.
